Unit 7

Balance of Payments:

Current Account

·         Balance on Goods and Services

·         Net Exports

·         Balance of Trades

·         Net Investments

·         Net Foreign Income

·         Net Transfers

Current Account Credits: (Assets, Demand for the $, “Inflows”) and Debits (Liabilities, Supply of the $, “Outflows”)

    Credits

  Exports

 Tourism here

  Interest/dividends payments

  Foreigners paid to the US use of exported capital

  Aid to the US

  Transfers back to the US

  Our Royalties

      Debits

  Imports

 Tourism there

 Interest/Dividend payments the US made for use of foreign capital invested in the US

 Aid to them

  Remittances from the US

  Their Royalties

Financial Accounts/“Capital Accounts”

       Credits

   Capital inflows

   Direct investments in US by foreigners

   Purchase of stocks and bonds by foreigners

       Debits

  Capital Outflows
  Direct invest by the US over there

 Purchases of stocks and bonds by the US

Official Reserves of Official Settlements or Special Drawing Rights

     Credits/Debits

   Currencies

   IMF holdings

   Gold